UBS brings back Ermotti as CEO to oversee Credit Suisse deal

UBS Group is bringing back Sergio Ermotti as chief executive officer to oversee the complicated acquisition of Credit Suisse Group, replacing Ralph Hamers after a tenure that lasted just over two years.

Ermotti, chairman of Swiss Re, will reprise a role he held for nine years and will take over after the annual general meeting next week, according to a statement from the bank on Wednesday (Mar 29). Hamers will stay at the bank for a transition period.

UBS is tapping Ermotti, 62, for his crisis and restructuring experience to navigate the complex integration. He steered UBS through the aftermath of a rogue trader crisis by largely getting rid of much of the fixed-income trading business, shrinking the investment bank and increasing the focus on wealth management. His tenure also included difficulties, including a huge fine for a tax-evasion case in France and the departure of top executives.

His return restores a Swiss native to what is effectively now the nation’s megabank. UBS had broken with tradition when it appointed first Dutch Hamers as CEO and then Irishman Colm Kelleher as chairman, departing from the unofficial rule that at least one position should be occupied by a local executive. The same held true at Credit Suisse, which was led in its final months by Swiss executive Axel Lehmann and dual citizen Ulrich Koerner.

UBS shares rose as much as 3 per cent after the open in Zurich on Wednesday.  

UBS agreed to acquire its local rival earlier this month in an emergency, government-backed rescue after Credit Suisse lost the confidence of investors, clients and other banks following a string of scandals, losses and client outflows. The combination of the two major banks promises to be complex to pull off while offering potential to expand the wealth management business that UBS has focused on.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Hamers “agreed to step down to serve the interests of the new combination, the Swiss financial sector and the country,” UBS said in a statement. 

Ermotti served as CEO from 2011 until 2020. During his tenure he revamped governance policies after rogue trader Kweku Adoboli cost the bank billions of dollars, though the firm was also hit by legal fines in France after it was found guilty of helping wealthy French clients stash funds in undeclared Swiss accounts. 

UBS touted the relevance of Ermotti’s achievements in repositioning the bank after the 2008 financial crisis for the task ahead. 

The Swiss lender built up one of the best capital levels among peers under Ermotti and has said it wants to keep up its financial strength during the integration of Credit Suisse. 

UBS also touted Ermotti’s experience in cutting the investment bank during his team in charge, a feat that he will probably be expected to replicate. UBS Chairman Colm Kelleher, speaking at a press conference after the emergency rescue of Credit Suisse, said it would shrink its rival’s investment bank “and align it with our conservative risk culture.”

Hamers’ mission was to pull UBS into the digital age and grow it by serving a wider group of affluent clients. Yet, a key part of that strategy fell away last year when the deal to acquire US firm Wealthfront was scrapped. 

UBS said Hamers drove “a strong focus on clients” and seeing through the firm’s strategy while managing the firm’s costs and risks. The bank’s financial performance and capital strength allowed him to make record returns to shareholders via dividends and share buybacks, UBS said. He was also “instrumental” in pulling off the acquisition of Credit Suisse.

In a nod to the need to ensure employees and other stakeholders support the transformation of Switzerland’s top bank, the lender also cited Ermotti’s achievements in “restoring people’s pride in working for UBS.” BLOOMBERG